It’s clear that the Patient Protection and Affordable Care Act, otherwise known as Obamacare, is the law of the land. But it’s not so clear yet how the new law will impact credit unions over the next two years when the bulk of the health reform laws go into effect.

That uncertainty is creating more challenges for credit union HR leaders like Monica Horger, vice president of human resources for the $681 million Michigan First Credit Union in Lathrup Village, Mich.

In addition to the law’s mandates, fees and taxes that are expected to increase insurance premiums, Horger said Obamacare is increasing the credit union’s administrative costs. But other HR experts like Brad Pricer, human resources process leader at CUNA Mutual Group in Madison, Wis., said there are opportunities for credit unions to control and predict health care costs year over year through the emergence of private health care exchanges and defined contribution health care benefits.

“We are trying to control the costs internally, but I don’t think that will be feasible under the health care reform act,” said Horger. Up until two years ago when the new law was passed, Michigan First paid the entire health insurance premium for its 250 employees, who are now required to share premium costs.

Horger said administrative costs are rising as her HR department spends more time finding answers to health care insurance inquiries from employees because of ambiguities in the Obamacare provisions.

For example, the law allows parents to keep their children on their health care plan up to the age of 26, but it doesn’t specify whether that includes dental and eye care benefits. First Michigan wanted to find out if it could charge more to provide those benefits. To get an answer, the credit union hired a lawyer who did the research and determined Michigan First could charge extra for dental and eye vision coverage because it wasn’t legally obligated to provide those benefits under the health reform law.

“It’s a whole different ball game than it was in the past,” lamented Horger. “It’s our mission to continue to provide health care benefits for our employees, but they will have to share the burden of increasing costs in some manner.”

While some provisions of the health care reform law are already in effect, the bulk of its mandates that will have the biggest cost impact on employers and their employees will kick in this year and in 2014.

It’s anticipated that Obamacare will increase health care costs over the next few years for businesses because billions of dollars in various fees and taxes will be imposed on health insurers, high-wage earners, medical devices and brand name medications this year and in 2014.

However, the Obama administration contends the health care reform law will control escalating costs and eventually reduce premiums by $2,000 per family by 2019 for all businesses.

In the meantime, health care insurance costs continue to climb. Annual premiums for employer-sponsored family health coverage reached $15,745 in 2012, up 4% from 2011, reported the Kaiser Family Foundation. Moreover, employees are paying more than $4,300 toward the cost of their coverage. Since 2002, premiums have increased by 97%, outpacing the growth of wages and inflation.

Because of these rising costs, Dennis Witherspoon, an associate professor of banking and finance at Northwood University in Midland, Mich., and a former credit union executive, said some credit unions might be compelled to hire more part-time employees who usually are not eligible for health care benefits.

“The downside is that member service can be affected by this,” said Witherspoon. “I am a bit concerned that you may see some of that slip as more credit unions are forced to go with part-time staff to alleviate some of the health care requirements.”

Nevertheless, most companies are expected to continue to provide health care insurance because it is an essential retention and recruitment tool, according the CUNA Mutual Group’s Pricer.

Pricer said it’s important for credit unions to determine whether their health care plans are affordable and provides minimum coverage. If the plan doesn’t meet these two requirements, the credit union would be required to pay a penalty tax of up to $2,000 per employee come Jan. 1, 2014.

The CUNA Mutual Group website features a health care reform pay or play calculator that can help determine if the insurance is affordable and offers adequate coverage. A credit union health care plan is deemed affordable if all employees pay less than 9.5% of their incomes for coverage. Second, the health care plan provides adequate or minimal coverage if it pays for at least 60% of covered health care expenses.

The tax penalty does not apply to credit unions with fewer than 50 employees, who will have the opportunity to buy their own health care plan on state-run or federally run exchanges. These exchanges are essentially websites that will feature several health care plan options and provide information about how to select a plan that best suits the employees’ needs.

By March 1, employers must provide a notice to employees regarding the availability of health care reform insurance exchanges. The U.S. Department of Health and Human Services has indicated that it plans on issue model exchange notices for employers to use, according to CUNA Mutual Group.

Under a defined health care plan that most credit unions have been offering employees for years, CUs bought just one plan for employees, and its cost increases were tied to how the plan performed. If there were high employee claims against the health care plan, premiums would increase. If employee claims were low or average, premiums would stay the same or increase at a lower rate.

“The defined contribution approach allows employers to give employees a set amount of funds and allow them to pick out a plan on a private exchange that best suits their needs,” explained Pricer. “Through a defined contribution approach, the amount the employer gives to each employee isn’t necessarily tied to how any one individual plan performs. This allows credit unions year over year to anticipate what their health care will cost them.” Another advantage is that private health care exchanges can reduce administrative burdens on companies.

Over the past two years, offerings of high-deductible health insurance plans have increased from 17% to 22% among all employers, and from 23% to 36% of employers with 500 or more employees, according to a survey of employers by Mercer Consulting.

“I know some larger credit unions have high-deductible plans, and I’ve seen other credit unions headed in that direction,” said Witherspoon. “What it means is that credit union employees will have to set aside more money for their health care. While there are [flexible spending accounts] that can help them, it will still cost them more.”

In 2013, the tax-free contributions employees are allowed to contribute to an FSA drops from a maximum of $5,000 to $2,500 annually. That’s not good news for people with high-deductible plans managing chronic illnesses or health care needs of their children. Plus, if they don’t use the FSA funds, they are lost at the end of the year. But a report in Forbes magazine said the use it or lose rule may be modified by the federal government.

Studies suggest high-deductible plans cut spending on unnecessary care. Other studies, however, have found when people have to shell out more cash for their health care, they may forgo treatments or tests they need or should have, according to a recent report by Kaiser Health News. But what may counter this problem is the rise of workplace wellness programs.

Mercer Consulting research found that nearly 80% of large employers are supportive or very supportive of wellness programs that can help employees monitor their health and perhaps prevent major medical problems through cholesterol and blood pressure checks, cancer screenings, exercise and weight management programs.

Pricer advises credit unions to work closely with their health care broker who can help guide them through the maze of clarifications and proposed rules of the health care reform law that will be coming from the U.S. Department of Health Human Services throughout the next two years.

“Credit unions need to make sure their plans are in compliance with all the different requirements that come with health care reform,” advised Pricer.